Deposit Schemes Break New Records

I have sometimes been critical of deposit schemes, especially when they go bust and leave everyone out of pocket but a story this week is a very positive one. Apparently The Deposit Protection Scheme has broken all records in protecting deposits recently after recruiting a huge number of new letting agent members.

Kevin Firth, director of the DPS is delighted with the way things are going for the industry in general and his particular company. He has had this to say

“When we launched, we were aimed at private landlords with small property portfolios. However, the DPS has proven popular across the whole industry, including large portfolio landlords and letting agents.We’re continually told by agents that tenants feel safer when their deposit is protected by a trusted third party rather than the agent or landlord – and they would prefer to choose an agent that has our sticker in the window.”

It is probably true that tenants feel safer when their money is protected by a trusted third party and actually landlords may well feel it is easier to hand the money over rather than look after it themselves. Hopefully the problems we have encountered were mainly teething problems and the The Deposit Protection Scheme will be a good thing for all concerned heading into the future.

Property Recovery Likely To Last A Long Time

Many people, rightly or wrongly, are now starting to believe that the residential property market is well on its way to recovery. That is great news in itself but even better is the fact that history shows us that once recovery starts it is unlikely we will take another spill for quite some time.

The last property market crisis was around twenty years ago. Therefore, those people who are now looking to get into property right now can consider themselves to be in a fairly strong position for the near future if they do buy. Experts predict that we can safely assume a decade of relative growth.

This is especially true of the rental sector as this change in attitude towards renting we have been discussing kicks in. Buy To Let looks like becoming a particularly exciting investment opportunity in the near future.

Everything is looking fairly rosy in our sector then, right at present. The only word of warning being sounded by some is for people getting involved in Buy To Let for the first time. Experts talk of the stability of having a fixed rate loan to set your self off so that you have consistency in your repayments.

If you are able to find one that suits you this does not sound like bad advice. It is always comforting to know exactly how much you are paying. 

Property Investment All The Rage For Women

Statistics from the Auction Results and Analysis System (ARAS) reveal that a new wave of wealthy private investor is rising in numbers in the property investment market.

James Cannon, of newly-launched Mayfair–based auctions firm Cannon Capital, has said: “I’ve noticed there are a lot more women in sales rooms nowadays. In residential auctions, buyers have always been mixed and you get a lot of owner-occupiers, but in the commercial market this is a new trend.”

It appears that these female investors have often made their money in other sectors but are keen to get involved in the property market with their investment money. Some experts are putting the trend down to popularity of property TV shows such as Homes Under The Hammer, Property ladder and Location, Location, Location. These shows have bought property investment into the mainstream and exposed it to a wider audience, including women from other work sectors who may never have considered its benefits.

It is important though,  whether you are male or female, you make sure that you are suited to the property market before you get involved. A lot of people took the leap during the last property boom only to find it was certainly not something they enjoyed. 

Small Rise In Residential Rents Very Regional

There was a modest rise in the residential rent prices in the UK over the past month. The figure of 0.7% is nothing to be excited about by itself but it does continue a reasonably consistent trend for growth that is hopeful.

There was one month where things dropped but overall there appears to be an upward trend in what we are earning from our rental properties. In the main the experts are putting this trend down to a decrease in the availability of rental properties, there have not been fewer on the market since October 2008. This allows landlords to charge a fair rent instead of the cut price one some of them had resorted to.

Observers of the national trends are quick to point out, interestingly, that only looking at the figures for the whole country actually gives you a warped view of what is happening in the regional areas. South East England is seeing the rental market go ahead in leaps and bounds for example with a rise of around 2.3 % whereas those in the North East are suffering the opposite effects with the rental yield dropping by nearly 2.3%

From these figures it would seem that it has never been more important to do your geographical homework before adding a new property to your portfolio.

Small Rise In Residential Rents Very Regional

There was a modest rise in the residential rent prices in the UK over the past month. The figure of 0.7% is nothing to be excited about by itself but it does continue a reasonably consistent trend for growth that is hopeful.

There was one month where things dropped but overall there appears to be an upward trend in what we are earning from our rental properties. In the main the experts are putting this trend down to a decrease in the availability of rental properties, there have not been fewer on the market since October 2008. This allows landlords to charge a fair rent instead of the cut price one some of them had resorted to.

Observers of the national trends are quick to point out, interestingly, that only looking at the figures for the whole country actually gives you a warped view of what is happening in the regional areas. South East England is seeing the rental market go ahead in leaps and bounds for example with a rise of around 2.3 % whereas those in the North East are suffering the opposite effects with the rental yield dropping by nearly 2.3%

From these figures it would seem that it has never been more important to do your geographical homework before adding a new property to your portfolio.

Stamp Duty Changes Leave BTL Out In The Cold

I don’t think anyone was really expecting it to happen but their were still those who were disappointed this week when landlords were left out of the stamp duty reforms outlined in the budget. First time buyers were the recipients of a stamp duty break on properties up to £250 000 (lucky first time buyers if they can afford to spend that on their first property) but despite strong reasons why he should the Chancellor firmly refused to change anything where BTL was concerned.

David Brown, commercial director of LAL properties made this important point.

“Removal of stamp duty tax for first-time buyers is positive news for the housing market, but the unsung cornerstone – the private rental sector – has once again been overlooked.”

It is the very fact that the private rental sector is the the cornerstone of the British property market that the government keep ignoring, and I truly believe it will come back to bite them somewhere quite sensitive in the not too distant future.

I am not the only one who believes that the chancellors refusal to budge on stamp duty for landlords could leave the labour party with egg on its face when the country experiences a huge housing shortage. Many experts with far more impressive credentials than I are predicting doom and gloom unless the government wakes up to itself on this issue. 

Increase in BTL, Old and New

Leaders Real Estate Agency are reporting that they are seeing a substantial increase in people wanting to invest in BTL properties. Most of us were aware that with the recent loosening of the bank purse strings for experienced landlords many were looking to expand a healthy portfolio. More surprising are reports that a lot of the enquiries are from people who want to invest in property for the very first time.

Leaders’ managing director, Paul Weller, says: 

“Buy to let finance is still not easy to come by, but the situation has improved slightly in recent months, with more mortgage products and better deals coming onto the market. This, coupled with the extremely high demand we are experiencing for rental accommodation, has prompted many investors to take a fresh look at buy to let.”

He further goes on to say that given the right guidance they are confident that buy to let is still a great investment. He may well be right. The predicted housing crisis is almost certain to put landlords in avery strong position should it eventuate.

 

The government does not seem, on the surface of things anyway, to be taking very strong measures to avoid a housing shortage so the chances of it happening are not decreasing any. The private sector could well be in a position to go from strength to strength, returning profits for its investors and providing housing to the nation. Let’s hope so, hey?

Election No Excuse To Abandon BTL

A leading body representing Buy To Let insurance policy holders has warned that the election could be used as an excuse to not support the growth of the private rented sector.

The Association of Residential Letting Agents (Arla) says that the majority of its members express concerns that this is exactly what will happen. Furthermore 58% of the members it surveyed recently said they felt the government’s approach to expansion will be the number one factor in the type of growth seen in the property sector over the coming year.

Arla is most concerned about what it calls ‘prohibitive barriers to further investment’ such as stamp duty. A spokesperson had this to say

“Landlords must be treated as the businesses they have now become and afford them the taxation criteria which will incentivise the improvement of stock, and therefore the conditions which tenants live in,”

The issue of stamp duty just will not go away and i feel its mere persistence will eventually force the government to review its policies.

Speaking of policies, the budget is shortly upon us. I expect there will be enough contained in there to provide this blog with talking points for a week. I, for one, am looking forward to seeing what develops. 

Election To Bring Property Market Slow down

There was a very interesting article on the RLA (Residential Landlord’s Association) website this week regarding the effect that the upcoming election is likely to have on the property market. They were not talking about the possible effect of a new government or an old one with a new mandate either. They were simply discussing the effect of the actual election itself. Something, I admit I had not considered.

According to article the lead up to the election is likely to have a decelerating effect on the market as people sit back and wait to see what is going to occur. Many will want to see a new government formed and settled before they speculate on a huge investment.

It is not unusual for this kind of uncertainty to cause a downturn apparently and given the difficulty of the times it is probably inevitable. The specter of a hung parliament will do nothing to convince people to leap into spending money on their portfolio either. The good news is that figures show that after the election there is nearly always a decent upswing to even things out.

In other words patterns show that things come out fairly equal in the end. No comfort, I suppose, if you were hoping to get you property on the market for a quick sale but from an economic point of view unlikely to make any huge differences. 

Professional Landlord’s To Reap the Rewards Of Investment.

Mark Garner is the managing director of LettingZone and he has made a statement this week that will gladden the hearts of a lot of landlords who invested in property over three years ago.

He points out that the current situation for landlords who invested three years ago  is a positive one.

“For existing professional landlords, it has never been better because interest rates are at an all-time low so with the property you bought a while ago, the cash flow is looking really good.” He says.

He does have some bad news though for those that jumped on the bandwagon a little late and a little short. If you bough within the last three years and did not have the capital to fund your investment he predicts that you are now likely to be experiencing desperate problems.

He also address the issue of tenant default and the fact that high unemployment is likely to make this problem even worse in the near future, his recommendation is that landlords take out full insurance policies that protect them against void periods. 

It is clearly the sensible solution though it can be hard to be sensible when the idea of another monthly cost fills you with dread as you are barely making the payments as it is. The best advice i can give is to try and take out this kind of insurance if there is anyway you an afford it. It is a very good step towards a more stable future.